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Supreme Court Upholds the Affordable Care Act

The Supreme Court today upheld key provisions of the Affordable Care Act (ACA), but there are still many uncertainties for hospital executives. Two key pieces are apparent even now:

1. The Court upheld the individual mandate as a tax, but did not support the ACA provision that penalized states that refused to expand their Medicaid. Chief Justice Roberts wrote: “Nothing in our opinion precludes Congress from offering funds under the ACA to expand the availability of health care, and requiring that states accepting such funds comply with the conditions on their use. What Congress is not free to do is to penalize states that choose not to participate in that new program by taking away their existing Medicaid funding.” Hospitals will have to closely monitor the response from their states on expanding Medicaid because longstanding concerns about uncompensated care will remain an issue for hospital balance sheets.

2. For patients who can’t afford to buy insurance but live in states that decide not to participate in the new Medicaid expansion, a chunk of patients could continue to be uninsured. “A portion of the population will simply ignore the penalty for failing to have health insurance. There will be uncompensated care that remains.” And that will continue to add financial pressures to hospitals and health systems that are already looking to trim over 20% from their cost structure.

In the big picture, though, the ruling still means 30 million more paying customers – and that is a very good thing!

This is not socialism, but a compromise between federal expansion and states rights (i.e. state sovereignty) – the states get to decide, not the federal government. Ultimately, the ACA also depends on Congressional as well as state actions – the Supreme Court decision does support the three roles laid out by the Constitution” a division of power between the President, Congress, and the several states. The sky is not falling, Pat.